California Down Payment Takes 34 Years to Save in Los Angeles

Saving a California down payment can take more than 30 years, according to an analysis.

The analysis by Realtor.com found that in Los Angeles, it would take 34.1 years for a household earning the median income of $98,329 to save a mid-range down payment of $170,035, even if the household saves 5.1% of its annual income each year.

The analysis also found that the four U.S. areas where saving for a home down payment takes the longest were all in California.

The most difficult city nationwide was San Francisco. The city’s median household income was $132,568 this year, but the median down payment exceeded $245,466. The estimated time to save that amount was 36.5 years.

In San Jose, the median down payment was $304,623, and the median annual income was $166,000, requiring 36.2 years of saving. In San Diego, a household with a median income of $110,114 would need 30.1 years to save a down payment of $167,814.

The analysis said New York ranked fifth, with 23.4 years needed to save more than $121,796 for a down payment.

These areas share a common trait: housing inventory is limited while demand is high, making it difficult for prices to fall.

By contrast, the typical homebuyer nationwide needs about seven years to save for a down payment.

Realtor.com said, “Skyrocketing home prices are a problem, but a drop in saving rates amid recent economic deterioration is also one of the major reasons weakening purchasing power.”

The U.S. household saving rate exceeded 30% in 2020, but was around 5% this year. After the pandemic, inflation and living costs surged, increasing household spending. In 2022, the saving rate fell to 3%.

BY HOONSIK WOO [woo.hoonsik@koreadaily.com]